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Strategy in Telecommunications

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Strategy in Telecommunications Contents Feature Special Guest editorial, Jan A. Audestad ................................. 1 Voice quality under ATM cell loss, Jens Berger and Mechthild Stoer ............................... 85 Telecommunications and Complexity, Jan A. Audestad ............................................................ 2 Traffic from Mobility in Mobile Broadband Systems, Fernando J. Velez and Luis M. Correia ..................... 95 The role of uncertainty in strategic planning, Stein W. Wallace ......................................................... 21 The haves and have-nots – The distribution of ICTs in Norwegian households, Rich Ling .......... 102 Strategy for Enterprise Specifications, Jan A. Audestad .......................................................... 24 Agent Nets: a methodology for evaluation of enterprise strategies in information economy, Alexei A. Gaivoronski ................................................. 33 Technological Evolution: Some Strategic Considerations, Jan A. Audestad ................................ 49 Kaleidoscope An Object Oriented Model of the NORDTEL – 80 years of Nordic Telecommunications Business, Jan A Audestad, co-operation in the telecommunications area, Arvid Kjæreng and Laurent Mahieu ........................... 54 Einar Utvik and Villy Toft ........................................ 109 Real Options and Managerial Flexibility, Stein-Erik Fleten, Trond Jørgensen and Stein W. Wallace .................................................. 62 New Aspects of Service Provision and Technology Strategies in Telecommunications, Shane Dye, Asgeir Tomasgard and Stein W. Wallace ................... 67 How to Survive in the Future, Jan A. Audestad ......... 74 Editorial office: Telektronikk Telektronikk Telenor AS, Telenor Research & Development P.O. Box 83 N-2007 Kjeller, Norway Volume 94 No. 3/4 – 1998 Tel: (+ 47) 63 84 84 00 ISSN 0085-7130 Fax: (+ 47) 63 81 00 76 e-mail: [email protected] Editor: Ola Espvik Editorial board: Tel: (+ 47) 63 84 88 83 Ole P Håkonsen, Senior Executive Vice President Oddvar Hesjedal, Vice President, Research & Development Status section editor: Bjørn Løken, Director Per Hjalmar Lehne Graphic design: Tel: (+ 47) 63 84 88 26 Design Consult AS Editorial assistant: Layout and illustrations: Gunhild Luke Gunhild Luke, Britt Kjus, Åse Aardal Tel: (+ 47) 63 84 86 52 Telenor Research & Development Editorial JAN A AUDESTAD Strategy has to do with the way In Telenor (or rather Televerket) organisations or firms are man- operation research began during aged. Strategy as a process is not the 1970s. One key problem then the management of the organisa- was to use linear programming tion itself but rather the way in methods to find locations for which management obtains infor- exchanges and other equipment in mation in order to make decisions. order to make the network as Strategy and tactics are terms refer- cheap as possible. These are ring to the same thing and consist problems which are still with us. of methods supporting a common goal, namely the ability of a com- Since the early 1990s the com- pany or organisation to achieve its plexity of telecommunications has goals: in warfare to win the battle; increased enormously. This has to in industry to seize the market. do with several independent forms Tactics has to do with how strate- of evolution: evolution of new ser- gic knowledge is put into opera- vices in the basic portfolio of tion. In this meaning, strategy is telecommunications, application concerned with the long term plan- of telecommunications to new ning and manoeuvrings of the com- areas, evolution of the technology pany. toward processing making tech- nologies cheaper and more versa- Encyclopaedia Britannica defines tile, liberalisation of the market the difference between strategy and opening for competition and tactics as follows (in the Macro- new organisation of the business, paedia under Industrial Engineer- and regulation of the competition. ing and Production Management): (1) the longer the effect of a deci- As a result of the technological sion and the less reversible it is, the development society has become more strategic it is; (2) the larger the proportion of a system that is more dependent on telecommunications. The evolution is thus affected by a decision, the more strategic it is; and (3) the more something which concerns not only the telecommunications concerned a decision is with the selection of goals and objectives, industry but also society as a whole. The study of the impact of as well as the means by which they are to be obtained, the more this evolution on society has not really begun but is likely to strategic it is. In this definition it is tacitly understood that the ref- become a major subject taught at universities in the near future. erence is a continuous scale ranging from tactical to strategic deci- This can also be assessed from the popularity gained recently by sions. The scale is not only dependent on time – where tactical is the conferences of the International Telecommunication Society. short term and strategy is long term – but also on the quality of the These conferences are not concerned with technology but with decision: degree of irreversibility, part of the system affected and policies and interactions with society. Inspired by this way of the number of goals concerned. looking at the telecommunications industry, we have started this collection of papers with a discussion of the complexity of Below we are not concerned with the strategies themselves but telecommunications, where we try to evaluate several of these with the methods that can be applied to identify and elucidate complexities and describe how they interact. The intention is to strategic problems. These methods are referred to as operation show that these problems cannot be understood unless proper research. Operation research is mainly concerned with methods methods are used to analyse them. supporting the management of industrial organisations, govern- ments and defence systems, and is as such a multidisciplinary sci- The remaining papers are concerned with different aspects of the ence drawing on mathematical and statistical methods as well as strategic problems of the industry. These problems can only be new areas such as cybernetics, behavioural sciences, organisation understood in terms of the methods of operation research. The theory, decision theory, game theory and nonequilibrium econ- papers do not provide a complete picture of this vast subject mat- omy. ter but hopefully they will encourage further research of the strate- gic problems of telecommunications. Such studies have been done Operation research is a rather young science. Though operation with success for the oil industry and the energy industry. The research can be regarded as the science of applying scientific much more complex telecommunications industry has not yet methods to management and as such has been with us for a long been subject to this type of analysis in depth. This is an interna- time, it is usually agreed that its modern evolution as a separate tional phenomenon, and the education in business management of study began in Britain in 1937 when scientists were led to teach our own managers to be is based on studies of other and compara- military leaders how to use radar in anti-aircraft warfare. The tively much simpler business systems. methods – or rather the selection of methods – were developed during World War II, and several operation research groups were The present papers constitute one of the first collections of established analysing the impact of different ways of conducting operation research studies for the telecommunications industry mine warfare, air raids and ground battles. The first scientific ever published! groups dealing with this new subject were formed around 1950, much because of the success of the method during the war. How- ever, the methods were not applied at any significant scale for industrial management until the late 1950s. Telektronikk 3/4.1998 1 Telecommunications and Complexity JAN A. AUDESTAD 1 Problems the effect of the change may come two-fold. First, quality of service is bar- rather slowly. One example is again gained against low price as for the Inter- The main problems we are facing in the liberalisation of the market, which net, and the customers – residential or telecommunication are all related to com- represents a major change in one of the business – are sensitive to price but have plexity: variables, where it may take several little awareness concerning reliability. years before the impact is really seen Second, the way in which administrative • Complexity of technology; on the incumbent (Sweden and the data systems are specified and imple- • Complexity of products and markets; United Kingdom are examples of this). mented is different from that of telecom- Having an expectation that damping munications equipment: in the latter, • Complexity of organisation; does not exist or is insignificant, may most of the effort is put in handling of • Complexity of co-operation or com- lead to wrong regulations of the mar- exception conditions, autonomy, auto- petition; ket; matic fault recovery and fault isolation. Telecommunications systems have also • Complexity of value creation. • They may be described in terms of a strong real-time and concurrency require- large number of variables; that is, the ments. The real-time requirement implies This complexity is new. It did not exist spatiotemporal problem has too many that all processing
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